Investigators from the federal workplace watchdog have alleged fashion subscription start-up Her Fashion Box either grossly underpaid workers or paid them nothing at all.

Documents filed in the Federal Court claim business owner Kathleen Purkis has undercut the pay of three employees by more than $40,000.

One employee, a graphic designer who had completed a university degree, allegedly worked two days a week for nearly six months without any pay, before receiving a one-off payment of $1000.

Another graphic designer was allegedly underpaid $15,500 over two years of full-time work, while a third employee, engaged on a full-time basis, was allegedly underpaid $18,000 in a year.

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Fair Work Ombudsman Natalie James said the agency had received multiple requests for assistance from staff at Her Fashion Box since 2015, many to do with the company’s “unpaid internship” arrangement.

Unpaid placements or internships are legitimate in certain cases, such as when they are part of a vocational placement related to a course of study.

Her Fashion Box is a subscription-based business.

“The law prohibits the exploitation of workers by characterising them as ‘interns’ or as doing ‘work experience’ when they are fulfilling the role of an employee,” Ms James said.

“Such workers must be paid minimum employee entitlements.”

Her Fashion Box, created by Ms Purkis, is a subscription-based business that deducts fees from customers’ accounts each quarter before delivering a seasonal “fashion box” to their door. The start-up featured on the second season of Shark Tank.

Ms James said Ms Purkis had failed to comply with four demands to turn over documents to inspectors from the Fair Work Ombudsman.

The decision was made to take legal action due to the lack of co-operation and the significant amounts of money owed to young workers, Ms James said. “Employers cannot simply choose to label and employee as an ‘intern’ in order to avoid paying their staff according to their lawful entitlements.”

The legal action is the business’ latest run-in with authorities. Last year the NSW Fair Trading issued a warning about the company following a growing number of complaints from consumers who had never received their “fashion boxes”, had struggled to obtain refunds and kept having payments deducted from their accounts.